Sykes Enterprises, Incorporated Reports Fourth-Quarter and Full-Year 2012
Financial Results
*Higher Capacity Utilization Drives Earnings Per Share Relative to the
November 2012 Business Outlook
*EMEA's Operating Margin Expands Further in the Fourth Quarter
*Net Cash Provided by Operating Activities Increases Double-Digit
Comparably
*2012 Capacity Rationalization Goal Achieved
*Initiating First-Quarter and Full-Year 2013 Business Outlook
TAMPA, Fla., Feb. 25, 2013 (GLOBE NEWSWIRE) -- Sykes Enterprises, Incorporated
("SYKES" or the "Company") (Nasdaq:SYKE), a global leader in providing
comprehensive outsourced customer contact management solutions and services in
the business process outsourcing (BPO) arena, announced today its financial
results for the fourth quarter and full year ended December 31, 2012.
Fourth Quarter 2012 Financial Highlights
*Fourth quarter 2012 revenues from continuing operations of $304.3 million
increased $28.1 million, or 10.2%, from $276.2 million in the comparable
quarter last year; fourth quarter 2012 revenues included $30.5 million in
revenue contribution from the Alpine Access acquisition, which closed
August 20, 2012; excluding the revenue contribution from Alpine Access and
on a constant currency basis, fourth quarter 2012 comparable revenues
decreased 2.3% as demand from certain clients within the communications,
financial services and travel verticals was more than offset by
end-of-life client programs and the effect of strategic actions (the
previously announced and planned exit from Ireland and South Africa and
capacity rationalization in Amsterdam, as well as capacity rationalization
related to the integration of the ICT acquisition), revenues from both of
which were included in the year-ago quarter
*Fourth quarter 2012 operating margin from continuing operations on a GAAP
basis was 5.2% versus 3.9% in the comparable quarter last year; on a
non-GAAP basis (see section titled "Non-GAAP Financial Measures" for an
explanation and see Exhibit 6 for reconciliation), fourth quarter 2012
operating margin was 7.0% versus 7.2% in the same period last year as
benefits in the current quarter from higher revenues, higher capacity
utilization and the EMEA turnaround were more than offset by client
program ramp expenses and investments in facilities for future demand
*Fourth quarter 2012 diluted earnings per share from continuing operations
on a GAAP basis were $0.31 versus $0.14 in the comparable quarter last
year and versus the business outlook range of $0.18 to $0.23; of the $0.17
increase compared to the same period last year, approximately $0.12 was
due largely to a lower comparable tax rate, with the balance from higher
capacity utilization, strategic actions in EMEA and a lower share count
from 2012 share repurchases
*On a non-GAAP basis, fourth quarter 2012 diluted earnings per share from
continuing operations were $0.39 versus $0.27 in the same period last year
(see Exhibit 6 for reconciliation) and versus a business outlook range of
$0.28 to $0.33, with the comparable increase driven largely by the
above-mentioned factors; relative to the business outlook range, the
increase was principally due to higher capacity utilization and a lower
comparable tax rate
*Consolidated seat capacity decreased in line with the Company's stated
2012 year-end target of 2,000 to 39,300 in fourth quarter 2012 from 41,300
seats in the comparable period last year driven by the Company's on-going
efforts to rationalize underutilized capacity. Consolidated capacity
utilization rates increased to 75% in the fourth quarter 2012 from 73% in
the comparable period last year due to higher utilization rates in EMEA
and overall reductions in seat capacity
Americas Region
Revenues from continuing operations from the Company's Americas region,
including operations in North America and offshore (Latin America, South Asia
and the Asia Pacific region), increased 13.5% to $258.3 million, or 84.9% of
total revenues, for the fourth quarter of 2012 compared to $227.6 million, or
82.4% of total revenues, in the prior year's fourth quarter. The Alpine Access
acquisition contributed $30.5 million in revenues to the Americas region in
the fourth quarter of 2012. Excluding the revenue contribution from Alpine
Access and on a constant currency basis, the 2.0% comparable decline in
Americas' revenues from continuing operations was largely a result of
previously discussed end-of-life client programs, which more than offset the
increase in demand from certain clients within the financial services, travel
and communications verticals.
During the quarter, revenues from continuing operations generated from
services provided offshore decreased to 43% from 49% in the same period last
year principally due to a mix-shift in revenues to North America driven by
Alpine Access, whose clients reside in and are serviced from the U.S. and
Canada.
Sequentially, revenues from continuing operations generated from the Americas
region increased 8.7% to $258.3 million in the fourth quarter of 2012 compared
to $237.5 million, or 84.7% of total revenues, in the third quarter of 2012.
On a constant currency basis, the 8.5% increase was principally due to full
quarter's revenue contribution from the Alpine Access acquisition in the
fourth quarter versus a partial quarter's revenue contribution in the third
quarter due to the timing of the closing of the acquisition.
The Americas income from continuing operations for the fourth quarter of 2012
decreased 8.3% to $24.2 million, with an operating margin of 9.4% versus 11.6%
in the comparable quarter last year. On a non-GAAP basis, the Americas
operating margin from continuing operations was 11.6% versus 12.9% in the
comparable quarter last year, with the decrease due to a combination of
previously discussed end-of-life client programs, client program ramp expenses
and investments in facility upgrades and transfers (see Exhibit 7 for
reconciliation).
Sequentially, the Americas income from continuing operations for the fourth
quarter of 2012 increased 11.7% to $24.2 million, with an operating margin of
9.4% versus 9.1% in the third quarter of 2012.On a non-GAAP basis, the
Americas operating margin from continuing operations increased to 11.6% from
11.0% in the third quarter of 2012, driven by a full quarter's revenue
contribution from Alpine Access and expense leverage, coupled with cost
savings associated with facility closures and lower professional services fees
(see Exhibit 7 for reconciliation).
EMEA Region
Revenues from continuing operations from the Company's Europe, Middle East and
Africa (EMEA) region decreased 5.5% to $46.0 million, representing 15.1% of
total revenues for the fourth quarter of 2012, compared to $48.7 million, or
17.6% of total revenues, in the prior year's fourth quarter (EMEA's revenues
were down 3.8% on a constant currency basis). The constant currency decrease
in EMEA revenues from continuing operations was largely a result of previously
discussed end-of-life client programs and the effect of strategic actions (the
Company's planned exit from Ireland, South Africa and capacity rationalization
in Amsterdam).
Sequentially, revenues from continuing operations from the Company's EMEA
region increased 6.9% to $46 million for the fourth quarter of 2012 compared
to $43.0 million, or 15.3% of SYKES' total revenues in the third quarter of
2012 (EMEA's revenues were up 4.0% on a constant currency basis sequentially).
The constant currency increase in EMEA revenues from continuing operations was
driven largely by client demand within the technology, communications and
financial services verticals.
The EMEA region's income from continuing operations for the fourth quarter of
2012 was $3.6 million, or 7.9% of EMEA revenues, versus an operating loss of
$4.9 million, or negative 10.1% of revenues, in the comparable quarter last
year.On a non-GAAP basis, the operating margin from continuing operations
increased to 6.2% from 1.8% in the same period last year. The
more-than-three-fold increase was due to a combination of higher capacity
utilization rate and cost savings resulting from the previously discussed
strategic actions (see Exhibit 7 for reconciliation).
Sequentially, the EMEA region's income from continuing operations for the
fourth quarter of 2012 increased to $3.6 million, or 7.9% of revenues, from
$2.4 million, or 5.5% of revenues, in the third quarter of 2012. On a non-GAAP
basis, the EMEA operating margin from continuing operations was 6.2% versus
5.7% in the third quarter of 2012, with the increase due to better demand
coupled with an increase in capacity utilization (see Exhibit 7 for
reconciliation).
Corporate G&A Expenses
Corporate costs increased to $12.1 million, or 4.0% of revenues, in the fourth
quarter of 2012, compared to $10.7 million, or 3.9% of revenues, in the
comparable quarter last year, with the increase driven by a combination of
professional services fees and integration costs associated with the Alpine
Access acquisition. On a non-GAAP basis, corporate costs as a percentage of
revenues remained unchanged on a comparable basis at 3.7% of revenues (see
Exhibit 7 for reconciliation).
Sequentially, corporate costs decreased to $12.1 million, or 4.0% of revenues,
in the fourth quarter of 2012, from $15.3 million, or 5.5% of revenues, in the
third quarter of 2012, with the bulk of the transaction costs related to the
Alpine Access acquisition occurring in the third quarter of 2012. On a
non-GAAP basis, corporate costs decreased to $11.4 million, or 3.7% of
revenues, from $11.9 million in the third quarter, or 4.2% of revenues, with
the decrease due principally to lower variable incentive compensation (see
Exhibit 7 for reconciliation).
Interest & Other Expense and Taxes
Interest and other expense for the fourth quarter of 2012 was $0.8 million
versus interest and other income of $0.3 million in the comparable quarter
last year, with the $1.1 million swing due to a combination of a subsidiary
liquidation associated with the previously announced strategic actions in the
EMEA region and realized and unrealized foreign currency transaction losses.
The Company's effective tax rate in the fourth quarter 2012 was 11.0% versus
46.2% in the same period last year and below the estimated 18% provided in the
Company's November 2012 business outlook. The lower effective tax rate
comparably and relative to the business outlook was driven principally by
transaction and integration costs related to the Alpine Access acquisition,
which lowered pre-tax income in a higher tax-rate jurisdiction.
On a non-GAAP basis, the fourth quarter 2012 effective tax rate from
continuing operations was 18.0% compared to 42.0% in the same period last year
and below the estimated 23% provided in the Company's November 2012 business
outlook. The decrease versus the year-ago period and relative to the November
2012 business outlook was due mainly to a shift in the geographic mix of
earnings to lower tax rate jurisdictions.
2012 Financial Highlights
*2012 revenues of $1,127.7 million from continuing operations decreased
$41.6 million, or 3.6%, from 2011; excluding the $40.6 million in revenue
contribution from the Alpine Access acquisition and on a constant currency
basis, revenues from continuing operations decreased 6.1% comparably as
increased demand within the financial services, healthcare and travel
verticals was more than offset by end-of-life client programs and the
effect of strategic actions (the previously announced and planned exit
from Ireland and South Africa and capacity rationalization in Amsterdam,
as well as capacity rationalization related to the integration of the ICT
acquisition), revenues from both of which were included in the prior year
*2012 operating margin from continuing operations was 4.2% versus 5.6% on a
comparable basis in 2011; on a non-GAAP basis, 2012 operating margin from
continuing operations was 6.1% versus 7.1% for 2011, due to a combination
of lower revenues driven by previously discussed end-of-life client
programs and strategic actions and the corresponding operating
inefficiencies, unfavorable foreign currency movements, higher legal and
professional services fees as well as investments in facility upgrades and
transfers (see Exhibit 8 for reconciliation)
*2012 diluted earnings per share from continuing operations was $0.93
versus $1.15 in 2011 and above the Company's November 2012 business
outlook earnings per share range of $0.80 to $0.85. The decrease in the
Company's 2012 diluted earnings per share from continuing operations on a
comparable basis was due to a combination of transaction and integration
costs related to the Alpine Access acquisition, unfavorable foreign
exchange movements, investments in facility upgrades and transfers and
end-of-life of client programs, which was partially offset by a lower
effective tax rate and share count
*On a non-GAAP basis (see Exhibit 8 for reconciliation), 2012 diluted
earnings per share from continuing operations was $1.27 compared to $1.40
in 2011 and compared to a non-GAAP diluted earnings per share range of
$1.17 to $1.22 provided in the Company's November 2012 business outlook.
The decrease in the Company's 2012 non-GAAP diluted earnings per share
from continuing operations relative to 2011 was due principally to the
above mentioned factors; the increase in non-GAAP diluted earnings per
share relative to the November 2012 business outlook was due largely to
higher capacity utilization and a lower comparable tax rate
*2012 loss per share from discontinued operations, net of taxes, was
($0.27) versus ($0.09) in 2011 due principally to the loss on the sale of
the Company's Spanish operations in 2012 versus operating losses net of
taxes from the Company's operations in Spain in 2011
Liquidity and Capital Resources
The Company's balance sheet at December 31, 2012 remained strong with cash and
cash equivalents of $187.3 million. Approximately 97.6%, or $182.9 million,
was held in international operations and may be subject to additional taxes if
repatriated to the United States, including withholding tax applied by the
country of origin and U.S. taxes on the dividend income. At year-end, the
Company had approximately $91.0 million of borrowings outstanding under its
revolving senior credit facility with $154 million of undrawn borrowing
capacity. Net cash provided by operating activities was up 37% to $31.2
million in the fourth quarter of 2012 from $22.7 million in the same period
last year, with the increase driven by the Alpine Access acquisition and a
lower comparable tax provision.
Business Outlook
*Although the macro-economic environment is still somewhat mixed, the
Company is encouraged by the upward demand trajectory going into 2013.
This demand is driven by growth from both existing and new client programs
that span the communications, financial services, technology and travel
verticals across the Americas and EMEA regions. Concurrent with the
demand, the anticipated reduction in end-of-life programs year-over-year
is also providing further support to the Company's 2013 revenue outlook.
As in prior years, with the combination of seasonality and the timing of
ramps related to program wins, the Company expects consolidated
second-half 2013 revenues to be slightly greater than the first-half.
Because of the effects of seasonality coupled with merit wage increases,
the cold winter in Canada (roadside program), capacity build out expenses,
facility transfers and training for program ramps, operating margins in
the first half and somewhat through the third quarter of 2013 are expected
to disproportionately impacted;
*First quarter and full year 2013 business outlook reflects the unfavorable
impact of foreign exchange rates, particularly a stronger Philippines Peso
and Costa Rica Colon relative to the U.S. dollar;
*The combination of unfavorable foreign exchange rates, a higher effective
tax rate and the higher interest and other expense is expected to
unfavorably impact first quarter and full-year 2013 diluted earnings per
share relative to first quarter and full-year 2012 actual results by
approximately $0.07 and $0.28, respectively;
*The Company's revenues and earnings per share assumptions for the first
quarter and full year 2013 are based on foreign exchange rates as of
February 2013.Therefore, the continued volatility in foreign exchange
rates between the U.S. dollar and the functional currencies of the markets
the Company serves could have a further impact, positive or negative, on
revenues and both GAAP and non-GAAP earnings per share relative to the
business outlook for the first quarter and full-year;
*The Company remains on track to completing the operational integration of
Alpine Access by the second-half of 2013. The integration process is
expected to result in long-term operating efficiencies;
*The Company plans to add approximately 6,000 seats on a gross basis in
2013.Approximately 75% of the seat count is expected to be added in the
first half of 2013, with the remainder in the second half. A number of
these seat additions are related to previously discussed facility
transfers. Total seat count on a net basis for the full year, however, is
expected to increase by approximately 1,000 seats;
*The Company anticipates interest and other expense of approximately $1.0
million for the first quarter and $4.0 million for the full year 2013.
Included in the aforementioned amounts is net interest expense of $0.4
million and $1.6 million for the first quarter and full year 2013,
respectively, related to the debt associated with the acquisition of
Alpine Access. The increase in other expense relative to 2012 is driven
primarily by forecasted foreign currency transaction losses due to a
weakening U.S. dollar relative to certain functional currencies. These
amounts exclude the potential impact of any future foreign exchange gains
or losses in other expense; and
*The Company anticipates a higher effective tax rate for the first-quarter
and full-year 2013 versus the same periods last year due principally to a
discrete adjustment related to The American Taxpayer Relief Act of 2012
passed on January 2, 2013, which resulted in the Company incurring
withholding taxes on its offshore cash movements.
Considering the above factors, the Company anticipates the following financial
results for the three months ended March 31, 2013:
*Revenues in the range of $298.0 million to $302.0 million
*Effective tax rate of approximately 41%; on a non-GAAP basis, an effective
tax rate of approximately 37%
*Fully diluted share count of approximately 43.1 million
*Diluted earnings per share of approximately $0.10 to $0.12
**Non-GAAP diluted earnings per share in the range of $0.18 to $0.20
*Capital expenditures in the range of $10.0 million to $15.0 million
For the twelve months ended December 31, 2013, the Company anticipates the
following financial results:
*Revenues in the range of $1,220.0 million to $1,235.0 million
*Effective tax rate of approximately 25%; on a non-GAAP basis, an effective
tax rate of approximately 27%
*Fully diluted share count of approximately 43.1 million
*Diluted earnings per share of approximately $0.87to $0.97
**Non-GAAP diluted earnings per share in the range of $1.15 to $1.25
*Capital expenditures in the range of $55.0 million to $65.0 million
*See "Business Outlook Reconciliation" (Exhibit 10) for First Quarter and
Full-Year 2013 non-GAAP diluted earnings per share reconciliation.
Conference Call
The Company will conduct a conference call regarding the content of this
release tomorrow, February 26, 2013, at 10:00 a.m. Eastern Time.The
conference call will be carried live on the Internet.Instructions for
listening to the call over the Internet are available on the Investors page of
SYKES' website at www.sykes.com.A replay will be available at this location
for two weeks.This press release is also posted on the SYKES website at
http://investor.sykes.com/investor-relations/Investor-Resources/Investor-Relations-Home/default.aspx.
Non-GAAP Financial Measures
Non-GAAP income from continuing operations, non-GAAP operating margins,
non-GAAP tax rate, non-GAAP income from continuing operations, net of taxes,
per diluted share and non-GAAP income from continuing operations by segment
are important indicators of performance as these non-GAAP financial measures
assist readers in further understanding the Company's results from operations
and how management evaluates and measures such performance. These non-GAAP
indicators of performance are not measures of financial performance under U.S.
Generally Accepted Accounting Principles ("GAAP") and should not be considered
a substitute for measures determined in accordance with GAAP. Refer to the
exhibits in the release for detailed reconciliations.
About Sykes Enterprises, Incorporated
SYKES is a global leader in providing a comprehensive customer contact
management solutions and services in the business process outsourcing (BPO)
arena.SYKES provides an array of sophisticated customer contact management
solutions to Fortune 1000 companies around the world, primarily in the
communications, financial services, healthcare, technology and transportation
and leisure industries.SYKES specializes in providing flexible, high quality
customer support outsourcing solutions with an emphasis on inbound technical
support and customer service.Headquartered in Tampa, Florida, with customer
contact management centers throughout the world, SYKES provides its services
through multiple communication channels encompassing phone, e-mail, web, chat
and social media.Utilizing its integrated onshore/offshore and virtual
at-home agent delivery models, SYKES serves its clients through two geographic
operating segments: the Americas (United States, Canada, Latin America, India
and the Asia Pacific region) and EMEA (Europe, Middle East and Africa).SYKES
also provides various enterprise support services in the Americas and
fulfillment services in EMEA, which include multi-lingual sales order
processing, payment processing, inventory control, product delivery and
product returns handling.For additional information please visit
www.sykes.com.
Forward-Looking Statements
This press release may contain "forward-looking statements," including SYKES'
estimates of future business outlook, prospects or financial results,
statements regarding SYKES' objectives, expectations, intentions, beliefs or
strategies, or statements containing words such as "believe," "estimate,"
"project," "expect," "intend," "may," "anticipate," "plans," "seeks,"
"implies," or similar expressions.It is important to note that SYKES' actual
results could differ materially from those in such forward-looking statements,
and undue reliance should not be placed on such statements.Among the
important factors that could cause such actual results to differ materially
are (i) the impact of economic recessions in the U.S. and other parts of the
world, (ii) fluctuations in global business conditions and the global economy,
ability of maintaining margins offshore (iii) SYKES' ability to continue the
growth of its support service revenues through additional technical and
customer contact centers, (iv) currency fluctuations, (v) the timing of
significant orders for SYKES' products and services, (vi) loss or addition of
significant clients, (vii) the early termination of contracts by clients,
(viii) SYKES' ability to recognize deferred revenue through delivery of
products or satisfactory performance of services, (ix) construction delays of
new or expansion of existing customer support centers, (x) difficulties or
delays in implementing SYKES' bundled service offerings, (xi) failure to
achieve sales, marketing and other objectives, (xii) variations in the terms
and the elements of services offered under SYKES' standardized contract
including those for future bundled service offerings, (xiii) changes in
applicable accounting principles or interpretations of such principles, (xiv)
delays in the Company's ability to develop new products and services and
market acceptance of new products and services, (xv) rapid technological
change, (xvi) political and country-specific risks inherent in conducting
business abroad, (xvii) SYKES' ability to attract and retain key management
personnel, (xviii) SYKES' ability to further penetrate into vertically
integrated markets, (xix) SYKES' ability to expand its global presence through
strategic alliances and selective acquisitions, (xx) SYKES' ability to
continue to establish a competitive advantage through sophisticated
technological capabilities, (xxi) the ultimate outcome of any lawsuits or
penalties (regulatory or otherwise), (xxii) SYKES' dependence on trends toward
outsourcing, (xxiii) risk of interruption of technical and customer contact
management center operations due to such factors as fire, earthquakes,
inclement weather and other disasters, power failures, telecommunications
failures, unauthorized intrusions, computer viruses and other emergencies,
(xxiv) the existence of substantial competition, (xxv) the ability to obtain
and maintain grants and other incentives, including tax holidays or otherwise,
(xxvi) risks related to the integration of the businesses of SYKES and Alpine
Access and (xxvii) other risk factors listed from time to time in SYKES'
registration statements and reports as filed with the Securities and Exchange
Commission.All forward-looking statements included in this press release are
made as of the date hereof, and SYKES undertakes no obligation to update any
such forward-looking statements, whether as a result of new information,
future events, or otherwise.
Sykes Enterprises, Incorporated
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Exhibit 1
Three Months Ended
December 31, December 31, September 30,
2012 2011 2012
Revenues $304,272 $276,234 $280,526
Direct salaries and related costs (201,194) (181,978) (183,628)
General and administrative (86,974) (82,086) (87,905)
Net gain (loss) on disposal of (308) (411) (199)
property and equipment
Net (gain) on insurance settlement -- -- --
Impairment of long-lived assets (84) (954) (122)
Income from continuing operations 15,712 10,805 8,672
Total other income (expense), net (784) 273 (839)
Income from continuing operations 14,928 11,078 7,833
before income taxes
Income taxes (1,638) (5,118) 309
Income from continuing operations, net 13,290 5,960 8,142
of taxes
(Loss) from discontinued operations, -- (1,441) --
net of taxes
Gain (loss) on sale of discontinued -- 559 --
operations, net of taxes
Net income (loss) $13,290 $5,078 $8,142
Net income (loss) per share:
Basic:
Continuing operations $0.31 $0.14 $0.19
Discontinued operations 0.00 (0.02) 0.00
Net income (loss) per share $0.31 $0.12 $0.19
Diluted:
Continuing operations $0.31 $0.14 $0.19
Discontinued operations 0.00 (0.02) 0.00
Net income (loss) per share $0.31 $0.12 $0.19
Weighted average shares:
Basic 43,057 43,659 43,014
Diluted 43,081 43,847 43,031
Sykes Enterprises, Incorporated
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Exhibit 2
Year Ended
December 31, December 31,
2012 2011
Revenues $1,127,698 $1,169,267
Direct salaries and related costs (737,952) (763,930)
General and administrative (341,354) (341,586)
Net gain (loss) on disposal of property and (391) 3,021
equipment
Net (gain) on insurance settlement 133 481
Impairment of long-lived assets (355) (1,718)
Income from continuing operations 47,779 65,535
Total other income (expense), net (2,622) (1,879)
Income from continuing operations before income 45,157 63,656
taxes
Income taxes (5,207) (11,342)
Income from continuing operations, net of taxes 39,950 52,314
(Loss) from discontinued operations, net of taxes (820) (4,532)
Gain (loss) on sale of discontinued operations, net (10,707) 559
of taxes
Net income (loss) $28,423 $48,341
Net income (loss) per share:
Basic:
Continuing operations $0.93 $1.15
Discontinued operations (0.27) (0.09)
Net income (loss) per share $0.66 $1.06
Diluted:
Continuing operations $0.93 $1.15
Discontinued operations (0.27) (0.09)
Net income (loss) per share $0.66 $1.06
Weighted average shares:
Basic 43,105 45,506
Diluted 43,148 45,607
Sykes Enterprises, Incorporated
Segment Results
(in thousands, except per share data)
(Unaudited)
Exhibit 3
Three Months Ended
December 31, December 31,
2012 2011
Revenues:
Americas $258,306 $227,583
EMEA 45,966 48,651
Total $304,272 $276,234
Operating Income:
Americas $24,192 $26,374
EMEA 3,627 (4,917)
Corporate G&A expenses (12,107) (10,652)
Income from continuing operations 15,712 10,805
Total other income (expense), net (784) 273
Income taxes (1,638) (5,118)
Income from continuing operations, net of taxes $13,290 $5,960
Year Ended
December 31, December 31,
2012 2011
Revenues:
Americas $947,147 $963,142
EMEA 180,551 206,125
Total $1,127,698 $1,169,267
Operating Income:
Americas $93,580 $115,727
EMEA 5,488 (3,746)
Corporate G&A expenses (51,289) (46,446)
Income from continuing operations 47,779 65,535
Total other income (expense), net (2,622) (1,879)
Income taxes (5,207) (11,342)
Income from continuing operations, net of taxes $39,950 $52,314
Sykes Enterprises, Incorporated
Condensed Consolidated Balance Sheets
(in thousands, except seat data)
(Unaudited)
Exhibit 4
December 31, December 31,
2012 2011
Assets:
Current assets $467,342 $482,074
Property and equipment, net 101,295 91,080
Goodwill & intangibles, net 296,268 165,814
Other noncurrent assets 43,784 30,162
Total assets $908,689 $769,130
Liabilities & Shareholders' Equity:
Current liabilities $164,583 $149,285
Noncurrent liabilities 137,842 46,279
Shareholders' equity 606,264 573,566
Total liabilities and shareholders' $908,689 $769,130
equity
Sykes Enterprises, Incorporated
Supplementary Data
Q4 2012 Q4 2011
Geographic Mix (% of Total Revenues):
Americas (1) 85% 82%
Europe, Middle East & Africa (EMEA) 15% 18%
Total 100% 100%
^(1)Includes the United States, Canada, Latin America, South Asia and the
Asia Pacific (APAC) Region.Latin America,South Asia and APAC are included in
the Americas due to the nature of the business and client profile, which is
primarily made up of U.S. based clients.
Q4 2012 Q4 2011
Vertical Industry Mix (% of Total Revenues):
Communications 32% 31%
Financial Services 28% 30%
Technology / Consumer 17% 19%
Transportation & Leisure 8% 8%
Healthcare 7% 7%
Other 8% 5%
Total 100% 100%
Seat Capacity ^(3)
Q4 2012 Q4 2011
Americas (2) 34,000 35,500
EMEA 5,300 5,800
Total 39,300 41,300
Offshore 22,000 22,300
Capacity Utilization
Q4 2012 Q4 2011
Americas (2) 74% 74%
EMEA 82% 71%
Total 75% 73%
Offshore 77% 78%
^(2) Americas data includes offshore as some clients in the U.S. are serviced
from offshore geographies, including The Philippines, Costa Rica, etc.
^(3) The seat capacity and capacity utilization data are related to the
Company's brick-and-mortar call centers. At the end of fourth quarter 2012,
the Company had approximately 3,300 agent FTEs working virtually from home
both in the U.S. and Canada, including 2,900 from Alpine Access.
Sykes Enterprises, Incorporated
Cash Flow from Operations
(in thousands)
(Unaudited)
Exhibit 5
Three Months Ended
December 31, December 31,
2012 2011
Cash Flow From Operating Activities:
Net income (loss) $13,290 $5,078
Depreciation and amortization 14,171 11,837
Changes in assets and liabilities and other 3,719 5,800
Net cash provided by operating activities $31,180 $22,715
Capital expenditures $12,292 $8,102
Cash interest paid $513 $278
Cash taxes paid $3,149 $6,398
Year Ended
December 31, December 31,
2012 2011
Cash Flow From Operating Activities:
Net income (loss) $28,423 $48,341
Depreciation and amortization 50,848 53,467
Changes in assets and liabilities and other 7,243 806
Net cash provided by operating activities $86,514 $102,614
Capital expenditures $38,647 $29,890
Cash interest paid $2,239 $1,065
Cash taxes paid $28,822 $24,631
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information
(in thousands, except per share data)
(Unaudited)
Exhibit 6
Three Months Ended
December 31, December 31,
2012 2011
GAAP income from continuing operations $15,712 $10,805
Adjustments:
Acquisition-related severance & consulting 271 --
engagement costs
Acquisition-related depreciation & amortization of 5,004 3,129
property & equipment and intangible write-ups
Merger & integration costs 697 (620)
EMEA restructuring (757) 6,267
Other 436 331
Non-GAAP income from continuing operations $21,363 $19,912
Three Months Ended
December 31, December 31,
2012 2011
GAAP income from continuing operations, net of $0.31 $0.14
taxes, per diluted share
Adjustments:
Acquisition-related severance & consulting 0.00 --
engagement costs
Acquisition-related depreciation & amortization of 0.08 0.05
property & equipment and intangible write-ups
Merger & integration costs 0.01 (0.01)
EMEA restructuring (0.02) 0.09
Other 0.01 --
Non-GAAP income from continuing operations, net of $0.39 $0.27
taxes, per diluted share
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information By Segment
(in thousands)
(Unaudited)
Exhibit 7
Americas EMEA Other ^(1)
Three Months Ended Three Months Ended Three Months Ended
December December December December December December
31, 31, 31, 31, 31, 31,
2012 2011 2012 2011 2012 2011
GAAP income from
continuing $24,192 $26,374 $3,627 ($4,917) ($12,107) ($10,652)
operations
Adjustments:
Acquisition-related
severance & 271 -- -- -- -- --
consulting
engagement costs
Acquisition-related
depreciation &
amortization of
property & 5,004 3,129 -- -- -- --
equipment and
intangible
write-ups
Merger & -- (46) -- (574) 697 --
integration costs
EMEA restructuring -- -- (757) 6,267 -- --
Other 436 -- -- 113 -- 218
Non-GAAP income
from continuing $29,903 $29,457 $2,870 $889 ($11,410) ($10,434)
operations
Americas EMEA Other ^(1)
Three Months Ended Three Months Ended Three Months Ended
December September December September December September
31, 30, 31, 30, 31, 30,
2012 2012 2012 2012 2012 2012
GAAP income from
continuing $24,192 $21,654 $3,627 $2,359 ($12,107) ($15,341)
operations
Adjustments:
Acquisition-related
severance & 271 320 -- -- -- 377
consulting
engagement costs
Acquisition-related
depreciation &
amortization of
property & 5,004 3,766 -- -- -- --
equipment and
intangible
write-ups
Merger & -- -- -- -- 697 3,045
integration costs
EMEA restructuring -- -- (757) 104 -- --
Other 436 418 -- -- -- --
Non-GAAP income
from continuing $29,903 $26,158 $2,870 $2,463 ($11,410) ($11,919)
operations
^(1) Other includes corporate and other costs.
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information
(in thousands, except per share data)
(Unaudited)
Exhibit 8
Year Ended
December 31, December 31,
2012 2011
GAAP income from continuing operations $47,779 $65,535
Adjustments:
Acquisition-related severance & consulting 968 126
engagement costs
Acquisition-related depreciation & amortization of 14,823 12,168
property & equipment and intangible write-ups
Merger & integration costs 3,848 774
EMEA restructuring 522 6,267
Other 1,404 (1,700)
Non-GAAP income from continuing operations $69,344 $83,170
Year Ended
December 31, December 31,
2012 2011
GAAP income from continuing operations, net of $0.93 $1.15
taxes, per diluted share
Adjustments:
Acquisition-related severance & consulting 0.01 --
engagement costs
Acquisition-related depreciation & amortization of 0.24 0.18
property & equipment and intangible write-ups
Merger & integration costs 0.07 0.01
EMEA restructuring 0.00 0.09
Other 0.02 (0.03)
Non-GAAP income from continuing operations, net of $1.27 $1.40
taxes, per diluted share
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information By Segment
(in thousands)
(Unaudited)
Exhibit 9
Americas EMEA Other ^(1)
Year Ended Year Ended Year Ended
December December December December December December
31, 31, 31, 31, 31, 31,
2012 2011 2012 2011 2012 2011
GAAP income from
continuing $93,580 $115,727 $5,488 ($3,746) ($51,289) ($46,446)
operations
Adjustments:
Acquisition-related
severance & 591 -- -- -- 377 126
consulting
engagement costs
Acquisition-related
depreciation &
amortization of
property & 14,823 12,168 -- -- -- --
equipment and
intangible
write-ups
Merger & 106 967 -- (206) 3,742 13
integration costs
EMEA restructuring -- -- 422 6,267 100 --
Other 1,404 (4,209) -- 113 -- 2,396
Non-GAAP income
from continuing $110,504 $124,653 $5,910 $2,428 ($47,070) ($43,911)
operations
(1) Other includes corporate and other costs.
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information
(Unaudited)
Exhibit 10
Business Outlook
First Quarter
2013
GAAP income from continuing operations, net of taxes, per $0.10 - $0.12
diluted share
Adjustments:
Acquisition-related severance & consulting engagement costs
Acquisition-related depreciation & amortization of property & 0.08
equipment and intangible write-ups
Merger & integration costs
EMEA restructuring
Other
Non-GAAP income from continuing operations, net of taxes, per $0.18 - $0.20
diluted share
Business Outlook
Full Year
2013
GAAP income from continuing operations, net of taxes, per $0.87 - $0.97
diluted share
Adjustments:
Acquisition-related severance & consulting engagement costs
Acquisition-related depreciation & amortization of property & 0.27
equipment and intangible write-ups
Merger & integration costs 0.01
EMEA restructuring
Other
Non-GAAP income from continuing operations, net of taxes, per $1.15 - $1.25
diluted share
CONTACT: For additional information contact:
Subhaash Kumar
Sykes Enterprises, Incorporated
(813) 233-7143